Congress Just Started Caring About the Sharing Economy

If the so-called "sharing economy" grows into some significant piece of the U.S. economy at large – as many of its advocates predict – Wednesday will mark the day when Congress first began to inquire about just what it all means.

"Do you have to give out 1099s?" wondered Congressman Chris Collins, a Republican from New York.

"This is fascinating," said Arizona Republican Representative David Schweikert, pondering a startup platform called 1000 Tools that enables people to rent cement hammers from each other. "You may slow down capital expenditures but actually make the economy much more efficient." What's the net effect of that?

The federal government doesn't have a ton of influence to wield here just yet.

"Given the nature of peer-to-peer platforms, it would be difficult if not impossible to capture their contribution in official employment statistics," argued Congresswoman Nydia Velazquez, raising a good point. "So what are the ramifications of excluding this job creation from government employment indicators?"

The questions came up Wednesday at a House Committee on Small Business hearing that marked the first time Congress has peered into the sharing economy. The tone of the inquiry was more sympathetic than probing. And the event, attended by just a few dozen congressional aids and industry insiders, was low-stakes. There's no related federal legislation waiting in the wings hoping to suddenly regulate these businesses, which are perhaps mostly notable for the fact that no one yet knows how best to regulate them.

The most controversial companies in this space – Airbnb and Uber among them – also weren't at the witness table (come to think of it, neither were any of the local regulators or incumbent businesses who've been sparring with them in Seattle or New York or Philadelphia). Instead, the committee invited Sidecar's assistant general counsel, Beth Stevens, and Alan Mond, the CEO of 1000 Tools, still in beta, as well as two academics, NYU's Arun Sundararajan and George Mason's Philip Auerswald, to explain the sharing economy's economic implications.

Both Sundararajan and Auerswald tried to convey that an important shift is happening here in how people work and create value for the broader economy, and the committee seemed to buy this premise. "This is just the tip of the iceberg," Auerswald said afterward. He's waiting for the sharing economy to come to health care.

Members of the committee get credit for largely asking the right questions (if not the most skeptical ones) about how to measure the impact of these businesses, how to regulate the peer-to-peer space without quashing it, and how to weigh the fairness concerns of more traditional brick-and-mortar companies at the same time. Not a single congressmember (eight of them showed up) wasted time on the one question that now seems irrelevant: Why would anyone let a stranger in their car, or loan a stranger their stuff?

The federal government, as Velazquez pointed out, doesn't have a ton of influence to wield here just yet. Most of the coming policy battles over what kind of auto insurance ride-sharing companies need, or what kind of taxes an Airbnb host ought to pay, will take place at the local and state level. But as companies like Sidecar and Airbnb push for recognition as something more than a niche oddity – as something crucial to the economy at large – it's noteworthy that part of Congress has begun to pay attention.

About the Author

Emily Badger is a former staff writer at CityLab. Her work has previously appeared in Pacific Standard, GOOD, The Christian Science Monitor, and The New York Times. She lives in the Washington, D.C. area.